Industrial  Insurance 
Past  and  Present 


WP  3Tofjn  Jf.  Brpbeti 

Founder  of  The  Prudential  Insurance  Company  of  America 
and  Pioneer  of  Industrial  Insurance  in  America 


An  Article  published  in  the  American  Exchange  and  Review , 
Philadelphia,  Pa.,  November,  1911 

Mr.  Dryden’s  last  contribution  to  the  literature 
of  Industrial  Insurance 


NEWARK,  NEW  JERSEY 

Jgrubenttal  Insurance  Company  of  America 

MCMXII 


INDUSTRIAL  INSURANCE 
PAST  AND  PRESENT 

By  JOHN  F.  DRYDEN 


Founder  of  The  Prudential  Insurance  Company  of  America 


he  early  history  of  Industrial  insurance, 
as  of  all  other  social  institutions,  is  a 
matter  of  some  uncertainty  and  doubt. 
Previous  to  the  transaction  of  Indus¬ 
trial  insurance  by  large  incorporated 
companies,  the  earlier  Friendly  Soci¬ 
eties  and  Burial  Clubs  of  England, 
following  the  more  ancient  example  of 


the  Gilds,  had  provided  for  the  payment  of  burial 
expenses  in  return  for  periodical  payments,  in  many 
instances  collected  from  the  houses  of  the  insured. 
Societies  of  this  character  operated,  almost  without 
exception,  upon  erroneous  principles  of  mortality  and 
interest,  with  the  result  that  the  large  majority  of  such 
institutions  were  unable  in  the  long  run  to  meet  their 
obligations,  to  the  serious  disappointment  of  the  public. 
The  earliest  company  which  seems  to  have  undertaken 
the  transaction  of  life  insurance  on  the  weekly-premium- 
payment  plan  was  the  Industrial  and  General,  of  Lon¬ 
don,  established  in  1852,  which  from  the  outset  appears 
to  have  been  fairly  successful.  Following  the  Industrial 
and  General,  the  British  Industry,  also  of  London,  com¬ 
menced  Industrial  business  in  the  same  year,  followed 
by  The  Age,  of  London,  originally  founded  in  1852, 
but  which  seems  not  to  have  commenced  Industrial 
insurance  until  about  1853.  As  illustrating  the  diffi¬ 
culties  confronting  the  transaction  of  an  Industrial 
business  at  that  time,  the  following  quotation  from  the 
Third  Annual  Report  of  The  Age  Insurance  Company 
is  of  interest: 

“In  the  early  part  of  the  year  large  expectations 
were  also  formed  with  respect  to  the  industrial  branch 
of  assurance,  a  business  which  is  unquestionably  sus¬ 
ceptible  of  cultivation  to  an  infinite  degree,  if  the  direc¬ 
tors  were  disposed  to  permit  losses  to  run  parallel  with 


Industrial  Insurance — Past  and  Present 


successes;  but  the  experience  of  a  few  months  proved 
it  to  be  absolutely  necessary  to  confine  that  department 
within  very  narrow  limits.” 

THE  PRUDENTIAL  OF  LONDON 

The  business  of  the  Industrial  and  General  was  taken 
over,  in  1854,  by  the  Prudential  Assurance  Company 
of  London,  founded  in  1848.  This  company  had  its 
attention  directed  to  a  Parliamentary  report  on  assur¬ 
ance  associations,  published  the  year  before  and  in 
which  the  suggestion  had  been  made  that  the  benefits 
of  life  insurance  should  be  extended  to  the  general 
population,  particularly  to  the  wage-earning  or  artisan 
class.  By  inference  at  least,  the  subject  had  also  been 
considered  by  Parliament,  in  a  report  published  in  1850, 
on  the  Savings  of  the  Middle  and  Working  Classes, 
which  had  emphasized  the  insecurity  of  existing  thrift 
institutions  and  the  large  losses  incurred  by  the  poor 
as  the  result  of  imposition,  miscalculation  and  fraud. 
Aside  from  these  considerations,  the  whole  question  of 
wage-earners’  insurance  had  been  before  the  English 
public  as  the  result  of  several  extensive  investigations 
into  the  practices  of  Friendly  Societies  and  Burial 
Clubs,  published  by  order  of  Parliament  between  1847 
and  1854.  Throughout  these  inquiries  it  had  been 
made  evident  that  the  existing  thrift  institutions  were 
largely  of  a  nature  to  induce  the  poor  or  wage-earning 
element  of  the  nation  to  contribute  its  savings  to  funds 
or  societies  making  large  promises  without  being  in  a 
position  to  guarantee  their  ultimate  fulfilment. 

THE  PRUDENTIAL  OF  AMERICA 

Out  of  considerations  like  these  had  come  the  demand 
for  a  more  safe  and  suitable  form  of  insurance  applicable 
to  the  needs  of  wage-earners  and  others  unable  to  pay 
premiums  otherwise  than  at  weekly  intervals.  The 
credit  for  having  first  realized  the  truly  tremendous 
social  and  economic  importance  of  this  idea  belongs  by 


Industrial  Insurance — Past  and  Present 

right  to  the  Prudential  Assurance  Company  of  London, 
which  commenced  the  Industrial  business,  properly 
so-called,  in  1854,  followed  in  the  United  States,  in  1875, 
by  the  establishment  of  The  Prudential  Insurance  Com¬ 
pany  of  America. 

INDUSTRIAL  INSURANCE  DEFINED 

Industrial  Insurance  has  been  appropriately  defined  as 
different  from  Ordinary  level  premium  life  insurance  in 
the  following  four  essential  points:  “First,  the  pre¬ 
miums  are  payable  weekly,  instead  of  being  payable 
quarterly,  semi-annually  or  annually;  second,  the 
premiums  are  collected  from  the  house  of  the  insured 
by  an  agent  of  the  company;  third,  the  amounts  of 
insurance  are  adjusted  to  the  unit  premium,  instead  of 
the  premium  being  adjusted  to  the  amount- — that  is, 
in  Industrial  insurance  certain  amounts  of  insurance 
can  be  purchased  for  a  premium  of  three  or  five  cents  per 
week  or  multiples  thereof,  while  in  Ordinary  insurance 
the  amount  is  in  round  numbers  and  usually  in  multiples 
of  one  thousand  dollars;  fourth,  every  member  of  the 
family  can  be  insured  for  a  small  premium,  while  in 
Ordinary  insurance,  as  a  rule,  only  the  head  of  the  family 
is  insured  for  a  proportionately  large  amount.” 

MISUSE  OF  THE  TERM 

In  the  sense  of  this  definition,  Industrial  insurance  has 
been  within  the  common  understanding  of  English- 
speaking  nations  throughout  the  world  for  many  years. 
Of  late,  however,  the  ever-increasing  agitation  for 
social  reform,  chiefly  with  regard  to  adequate  compensa¬ 
tion  for  industrial  accidents  and  industrial  diseases,  has 
led  to  the  adoption  of  the  term  “Industrial  Insurance” 
for  measures  of  social  relief  essentially  different  from 
the  objects  and  aims  of  Industrial  insurance  as  pre¬ 
viously  defined.  The  improvement  of  labor  conditions 
through  insurance,  as  a  matter  of  governmental  policy, 
may  be  said  to  have  had  its  origin  in  the  German  com- 

4 


Industrial  Insurance — Past  and  Present 

pulsory  insurance  system,  first  established  in  1884  and 
subsequently  enlarged  and  modified  until  it  to-day 
comprehends  practically  the  entire  wage-earning  popu¬ 
lation  of  the  German  Empire.  What  in  Germany  is 
defined  as  “Social  Insurance”  is  not,  however,  insurance 
in  the  strict  sense  of  the  term,  as  it  is  conducted  by 
private  enterprise  throughout  the  world. 

GOVERNMENT  “INSURANCE” 

The  difficulty  arises  out  of  the  fact  that  either  by  means 
of  a  government  guarantee ,  or  through  the  taxing  power, 
the  same  economic  results  may,  of  course,  be  achieved 
as  through  the  voluntary  contributions  on  the  part  of  a 
number  of  persons  associated  for  a  common  purpose  to 
secure  the  payment  of  a  given  sum  in  the  event  of  the 
occurrence  of  a  given  contingency.  The  risk  assumed 
in  true  insurance  is  the  exact  equivalent  of  the  pay¬ 
ments  required  aside  from  the  necessary  expenses  of 
management  and  a  reasonable  return  on  the  invested 
capital  when  the  business  is  conducted  upon  the  pro¬ 
prietary  plan.  In  so-called  government  or  compulsory 
insurance  no  contributions  whatever  may  be  required 
of  the  beneficiaries,  and,  for  illustration,  in  the  case  of 
the  German  system  of  compulsory  accident  insurance, 
the  entire  burden  of  cost  and  expense  is  borne  by  the 
employers,  or  perhaps  more  properly,  by  the  industry. 

workmen’s  compensation  law 

In  the  proposed  English  system  the  burden  will  be 
shared  in  different  proportions  by  the  employers,  the 
employees,  and  the  government.  In  the  United  States 
the  universally  unsatisfactory  state  of  employers’ 
liability  laws  has  resulted  in  an  ever-increasing  demand 
for  an  entire  abrogation  of  the  common  law  doctrine 
of  the  assumption  of  trade  risk  and  its  replacement  by  a 
comprehensive  statute  of  workmen’s  compensation 
more  or  less  on  the  basis  of  the  English  law  of  1906. 
The  various  state  commissions  which  have  considered 
the  matter  have,  therefore,  frequently  been  referred  to 

5 


Industrial  Insurance — Past  and  Present 

as  having  under  consideration  a  new  system  of  “Indus- 
trial”  insurance,  since  the  term  “Social  Insurance,” 
although  occasionally  employed,  is  still  quite  unfamiliar 
to  the  American  people.  It  is  self-evident,  however, 
that  Industrial  insurance,  as  generally  understood  by 
wage-earners  and  others  throughout  the  United  States 
since  the  introduction  of  this  form  of  insurance  by  The 
Prudential  in  1875,  is  by  right  of  priority  entitled  to  its 
exclusive  use,  and  that  the  term  social  insurance,  or 
workmen’s  insurance,  is  more  appropriate  for  state 
legislation  aiming  at  a  guarantee  of  definite  benefits  or 
indemnities  in  the  event  of  accident  and  illness  more  or 
less  the  result  of  industrial  pursuits. 

RELIEF  AND  BENEFIT  ASSOCIATIONS 

The  first  American  writer  to  use  the  term  “Industrial 
Insurance”  in  the  broadest  possible  sense  was  Prof. 
Charles  Richmond  Henderson,  of  the  University  of 
Chicago,  who  published  a  work  under  the  title  of 
“Industrial  Insurance”  in  1909,  including  in  this  term 
local  relief  societies,  the  benefit  features  of  trades  unions, 
insurance  by  fraternal  societies,  employers’  liability  law, 
pension  schemes,  whether  private  or  municipal,  and 
many  other  methods  and  systems  aiming  at  the  ameli¬ 
oration  of  labor  conditions  more  or  less  dependent  upon 
the  liability  to  accident,  sickness,  or  premature  death. 
It  must  be  considered  rather  unfortunate  that  the  term 
“Industrial  Insurance”  should  in  this  manner  have  been 
perverted  from  its  proper  use  and  been  made  to  com¬ 
prehend  practically  the  entire  field  of  methods  and 
means  whereby  compensation,  relief,  or  indemnity  can 
be  obtained  on  the  part  of  wage-earners  and  others 
more  or  less  exposed  to  accidents  and  illness  in  the 
following  of  industrial  pursuits. 

SO-CALLED  STATE  INDUSTRIAL  INSURANCE 

The  term  “Industrial  Insurance,”  in  a  broader  sense, 
was  also  adopted  by  the  Industrial  Insurance  Com- 

6 


Industrial  Insurance — Past  and  Present 

mittee  of  the  State  of  Wisconsin,  which,  however, 
limited  its  consideration  entirely  to  what  is  better  known 
and  understood  as  workmen’s  compensation  legislation, 
in  place  of  employers’  liability  law.  The  present  dis¬ 
cussion  only  incidentally  refers  to  the  modern  move¬ 
ment  for  reform  and  change  in  labor  conditions,  dealing 
chiefly  with  Industrial  insurance,  as  defined  at  the  out¬ 
set  and  as  limited  to  the  payment  of  a  sum  certain  in  the 
event  of  death,  in  return  for  periodical  premium  pay¬ 
ments  on  a  weekly  basis,  and  collected  from  the  houses 
of  the  insured. 

SUBSTITUTES  FOR  INDUSTRIAL  INSURANCE 

Numerous  substitutes  have  been  suggested  for  Indus¬ 
trial  Insurance,  but  none  has  been  proven  either  feasible 
or  practical  in  actual  experience.  Among  the  more 
interesting  is  The  Family  Mutual  Health  Insurance 
Company,  proposed  by  the  late  Mr.  Edward  Atkinson 
in  1901,  which  provided  for  the  elimination  of  collectors 
and  other  material  reductions  in  expense  to  secure 
medical  and  surgical  service,  hospital  and  dispensary 
treatment,  and  a  sanitary  inspection  service.  The 
suggestion  of  Mr.  Atkinson  was  never  carried  into  prac¬ 
tical  effect. 

THE  MASSACHUSETTS  SAVINGS  BANK  INSURANCE  PLAN 

In  1906,  Mr.  Louis  D.  Brandeis,  also  of  Boston,  pro¬ 
posed  a  system  of  wage-earners’  life  insurance,  which 
led  to  the  adoption  by  the  State  of  Massachusetts  of  the 
savings  bank  insurance  department  for  the  issuance  of 
life  insurance  and  annuities  through  savings  banks,  and 
which  came  into  existence  in  1907.  The  chief  feature  of 
this  system  is  the  elimination  of  canvassers  and  col¬ 
lectors,  in  place  of  which  the  co-operation  of  a  number 
of  large  industrial  establishments  has  been  secured. 
The  results  have  been  distinctly  disappointing,  and  on 
November  1,  1910,  only  3,318  policies  were  in  force,  for 
the  sum  of  $1,367, 363. f 

tThere  were  also  61  deferred  annuities  in  force  for  an  aggregate  of  $9,365. 

7 


Industrial  Insurance — Past  and  Present 


GROUP  INSURANCE 

In  1909  a  bill  was  introduced  in  the  Massachusetts 
Legislature  to  permit  so-called  group  insurance,  under 
which  a  reduction  in  premium  charges  could  be  secured, 
provided  a  sufficient  number  of  persons  insured  at  one 
time  and  agreed  to  the  collection  of  their  premium 
through  the  employer.  The  plan  is  theoretically  at¬ 
tractive,  but  in  practice  no  material  results  have  been 
achieved.  Similar  bills  have  been  introduced  in  New 
York,  New  Jersey,  and  several  other  states,  but  only 
in  Maine,  Minnesota  and  New  Jersey  has  favorable 
consideration  been  secured. 


OVER-THE-COUNTER  INSURANCE 

For  the  same  purpose,  of  eliminating  the  expense  of 
soliciting  and  collecting,  the  Legislature  of  Massachu¬ 
setts,  in  1907,  authorized  so-called  “Over-the-Counter” 
insurance,  which  has  never  in  practice  assumed  material 
importance,  but  in  the  state  of  New  York  a  company 
was  organized  for  the  purpose  of  transacting  life  insur¬ 
ance  entirely  through  the  mails,  which  has  met  with  a 
fair  amount  of  success.  Whether  the  large  necessary 
advertising  expense  to  keep  the  plans  and  purposes 
of  the  company  before  the  public  will  not  in  the  long 
run  prove  as  expensive  as  an  efficient  agency  organiza¬ 
tion  is  still  an  open  question. 


DIRECT  PAYMENT  OF  INDUSTRIAL  PREMIUMS 

The  latest  innovation  is  the  enactment  by  several  states, 
including  New  Jersey,  Pennsylvania  and  Rhode  Island, 
of  laws  permitting  an  Industrial  company  to  return  to 
policyholders  who  have  made  premium  payments  for  a 
period  of  at  least  one  year,  directly  to  the  company  at 
its  home  or  district  offices,  a  percentage  of  the  premium 
which  the  company  would  have  paid  for  the  weekly 
collection  of  such  premium. 

8 


Industrial  Insurance — Past  and  Present 

THE  NECESSITY  FOR  AGENTS 

The  chief  object,  of  course,  in  the  suggested  substitutes 
or  modifications  of  the  methods  of  Industrial  companies 
is  to  eliminate  the  agent,  who  performs  jointly  the  duty 
of  soliciting  for  new  insurance  and  of  collecting  the 
premiums  due  weekly  under  existing  policies.  Con¬ 
sidering  that  the  British  government,  as  far  back  as 
1864,  offered  to  the  public  a  favorable  contract,  pro¬ 
vided  the  premiums  were  paid  at  the  Postoffice  at 
monthly  intervals,  it  is  suggestive  that  after  more  than 
forty  years  the  number  of  life  policies  issued  through 
the  British  Post-office  during  the  year  ending  December 
31,  1910,  should  have  been  only  478.  It  is  also  de¬ 
cidedly  suggestive  that  with  the  advantage  of  a  large 
amount  of  free  advertising  and  the  hearty  co-operation 
of  philanthropic  individuals,  employers  and  institutions, 
the  Massachusetts  Savings  Bank  Insurance  plan  should 
thus  far  have  been,  for  practical  purposes,  a  failure. 
It  may  be  said  here,  also,  that  only  a  fair  degree  of 
success  has  been  achieved  by  the  government  annuities 
branch  of  Canada,  established  in  1908,  for,  even  with 
the  powerful  aid  of  the  postal  service  and  a  rightful 
claim  upon  the  Canadian  Civil  Service,  the  annuities 
branch  at  the  end  of  February,  1911,  had  only  1,630 
contracts  in  force.  It  would,  therefore,  seem  quite 
conclusive  that  the  Industrial  agent  is  an  inherent 
necessity  in  the  actual  development  of  the  business,  as 
well  as  in  maintaining  in  force  the  policies  secured  at 
considerable  expense.  It  is  not  necessary  here  to 
enlarge  upon  the  extreme  convenience  of  this  system  of 
insurance,  in  which  the  premium  payments  are  adjusted 
to  the  income  of  the  insured,  or,  in  other  words,  in  which 
the  premiums  are  payable  weekly,  primarily  and  chiefly 
because  wages  or  small  salaries  also  are,  as  a  rule, 
receivable  on  the  weekly  plan. 

INDUSTRIAL  INSURANCE  IN  THE  UNITED  STATES 

It  is  now  thirty-six  years  since  Industrial  insurance  was 
introduced  into  the  United  States,  and  out  of  a  most 

P 


Industrial  Insurance — Past  and  Present 


unpromising  beginning  a  business  of  truly  colossal 
magnitude  has  been  developed.  On  December  31, 
1910,  there  were  some  twenty-three  companies  in  the 
United  States  transacting  this  form  of  insurance,  in¬ 
cluding,  as  a  rule,  a  considerable  amount  of  Ordinary 
business,  which  in  some  cases  has  attained  to  much 
larger  proportions  than  the  business  results  secured  by 
exclusively  Ordinary  companies  in  operation  for  many 
years.  In  the  following  table  the  business  results  are 
summarized  for  the  year  ended  December  31,  1910, 
the  required  distinction  being  made  as  to  the  Industrial 
and  Ordinary  business,  and  as  to  the  number  of  policies 
and  the  amount  of  insurance. 


INDUSTRIAL  AND  ORDINARY  INSURANCE  IN  FORCE 
WITH  INDUSTRIAL  COMPANIES 


DECEMBER  31,  1910 


COMPANIES 

American  National  (Texas) .  . 

Baltimore  Life . 

Boston  Mutual  Life . 

Colonial  Life . 

Columbian  National . 

Commonwealth  Life  (Ky.) . .  . 
Equitable  Life  Ins.Co.of  D.C. 

Eureka  Life . 

Germania . 

Guaranty  Life  (Iowa) . 

Home  Life  (Delaware) . 

Immediate  Benefit  Life . 

Independent  Life . 

John  Hancock  Mutual  Life. . . 

Life  Ins.  Co.  of  Virginia . 

Metropolitan  Life . 

Mutual  of  Baltimore . 

North  State  Life . 

Ohio  Burial . 

Peoria  Life . 

Prudential . 

Public  Savings . 

Rome . 

St.  Louis  National  Life . 

West  Coast  Life . 

Western  and  Southern  Life. . . 
Total . 


INDUSTRIAL  INSURANCE 


90,866  312,481,273 

131,499  12,947,630 

48.926  9,212,427 

157,603  18,853,631 

2,894  430,194 

33,933  4,999,939 

38,606  4,222,945 

45,572  3,843,871 

1,994  259,906 

10,174  1,715,112 

17,510  1,724,519 

40,309  3,911,931 

18,619  1,462,738 

1,941,106  323,010,618 

528,165  60,818,178 

10,465,074  1,512,599,124 

62,177  9,138,603 

6,900  1,037,469 

13,646  1,193,647 

11,449  2,647,750 

8,957,170  1,143,352,017 

18,820  3,879,698 

28,954  3,650,873 

153  25,063 

28,813  4,126,757 

361.926  40,826,735 

23,062,858  33,182,372,648 


ORDINARY  INSURANCE 


NO.  OF 
POLICIES 

AMOUNT 

5,163 

39,528,623 

4,456 

3,473,841 

7,442 

6,668,685 

6,344 

6,105,100 

11,686 

37,220,289 

3,480 

6,040,432 

607 

466,320 

0 

0 

(*) 

(*) 

2,446 

2,094,115 

3,879 

4,705,420 

128 

75,557 

1,239 

1,761,700 

149,024 

243,305,747 

14,128 

11,622,196 

822,980 

703,252,264 

0 

0 

2,384 

2,506,492 

0 

0 

2,414 

4,050,500 

611,468 

707,906,332 

301 

237,400 

0 

0 

1,263 

1,812,218 

3,062 

6,735,190 

9,180 

8,418,293 

1,663,074  31,767,986,714 


(*)  Not  included;  no  longer  transacts  industrial  business,  but  a  little  Industrial  insurance  is  still  in  force. 

10 


Industrial  Insurance — Past  and  Present 


INDUSTRIAL-ORDINARY  INSURANCE 

According  to  this  table,  the  aggregate  number  of  Indus¬ 
trial  and  Ordinary  policies  in  force  with  Industrial 
companies  was  24,725,932,  or  82.5%  of  the  total  number 
of  policies  in  force  in  the  United  States  with  all  legal 
reserve  life  insurance  companies  on  December  31,  1910. 
By  amounts  of  insurance,  however,  the  proportion  of 
business  in  force  with  Industrial  companies  only  is 
necessarily  much  less  on  account  of  the  fact  that  the 
average  Industrial  policy  is  only  3138  and  the  Ordinary 
policy  with  Industrial  companies  #1,048,  against  an 
average  of  #2,135  for  companies  transacting  an  exclu¬ 
sively  Ordinary  business.  Considering  also  that  the 
Industrial  companies  have  made  special  efforts  to  write 
Ordinary  insurance  only  during  the  last  twenty  years, 
and  that  the  exclusively  Ordinary  companies  have  in 
some  cases  been  in  active  operation  for  more  than  half 
a  century,  it  is,  to  say  the  least,  a  most  significant 
evidence  of  their  vitality  and  aggressiveness  that  during 
so  comparatively  short  a  period  the  Industrial  com¬ 
panies  should  have  secured  13.4%  of  the  total  Ordinary 
insurance  in  force  with  level  premium  life  insurance 
companies  on  December  31,  1910.  This  truly  magni¬ 
ficent  result  is  largely  attributable  to  the  educational 
value  of  Industrial  insurance — to  its  efficacy  as  a 
method  of  teaching  thrift,  not  only  in  one  but  in  many 
directions.  It  is  not  necessary  to  enlarge  upon  this 
aspect  of  Industrial  insurance,  which,  however,  from 
a  social  and  economic  point  of  view  is  one  of  considerable 
importance.  It  may  be  said,  however,  in  this  connec¬ 
tion  that  most  of  the  Ordinary  insurance  written  by 
Industrial  insurance  companies  is  secured  among  an 
element  of  the  population  probably  not  reached  by 
exclusively  Ordinary  companies,  and  the  conclusion  fol¬ 
lows  that  were  it  not  for  the  active  and  energetic  efforts 
of  Industrial  agents,  a  large  part  of  the  vast  amount  of 
Ordinary  insurance  in  force  with  Industrial  companies 
would  probably  not  be  in  existence  at  all. 

11 


Industrial  Insurance — Past  and  Present 


COMPARATIVE  PROGRESS  OF  THRIFT  INSTITUTIONS 

A  brief  comparison  may  not  be  out  of  place  here  as  to 
the  relative  progress  of  provident  institutions,  chiefly, 
of  course,  savings  banks  and  building  and  loan  associ¬ 
ations,  for  which  the  statistical  data  are  available. 
Limiting  the  comparison  to  the  last  ten  years,  it  appears 
that  the  number  of  depositors  with  savings  banks  has 
increased  49.7%  and  the  amounts  on  deposit  70.5%, 
while  the  membership  of  building  and  loan  associations 
has  increased  only  from  1,512,685  in  1900,  to  2,169,893 
in  1910,  or  43.4%.  During  the  same  time  (1900  to 
1910),  the  number  of  Industrial  insurance  policies  has 
increased  105.6%  and  the  amount  of  insurance  in  force 
116.6%,  while  the  number  of  Ordinary  policies  in  force 
with  Industrial  companies  has  increased  359.3%  and 
the  amount  of  such  insurance  in  force  325.0%.  The 
progress  of  Industrial  insurance  has,  therefore,  by  far 
exceeded  the  corresponding  progress  of  savings  banks, 
while  the  building  and  loan  associations  because  of  their 
more  limited  function  have  apparently  reached  a  point 
of  slow  growth,  with  no  present  indication  of  a  more 
general  development  in  the  future.  To  emphasize  still 
further  the  remarkable  progress  of  Industrial  insurance, 
it  may  be  pointed  out  that,  while  the  increase  in  the 
number  of  Industrial  policies  during  the  decade  ending 
with  1910  was  11,458,374,  the  increase  in  the  amount 
of  insurance  in  force  was  31,667,058,970,  exclusive 
of  the  Canadian  business  of  American  Industrial  com¬ 
panies. 

PAID-UP  INSURANCE 

When  Industrial  insurance  was  first  introduced  no 
paid-up  or  cash  surrender  values  were  considered  ad¬ 
visable,  but  in  course  of  time  these  necessary  features 
were  incorporated  into  the  Industrial  policy  contract 
and  the  privilege  was  made  retroactive,  at  least  in  the 
case  of  all  the  large  companies.  On  December  31,  1910, 
six  companies,  having  97.6%  of  the  total  industrial 
insurance  in  force  in  the  United  States,  had  1,228,327 

12 


Industrial  Insurance — Past  and  Present 


paid-up  policies  on  their  books,  insuring  332,421,276. 
In  this  respect,  therefore,  as  in  all  others,  the  Industrial 
policy  contract  of  today  is  as  liberal  and  as  free  from 
technicalities  as  the  corresponding  policy  contract 
issued  on  the  Ordinary  plan. 


WORLD-WIDE  DEVELOPMENT  OF  INDUSTRIAL  INSURANCE 

What  is  true  of  Industrial  insurance  in  the  United 
States  is  more  or  less  true  also  of  Industrial  insurance 
in  most  of  the  other  civilized  countries  of  the  world. 
The  returns  are  not  available  for  all  of  the  different 
countries  in  which  Industrial  insurance  is  transacted, 
but  in  the  following  table,  data  have  been  brought  to¬ 
gether  for  the  year  1909  and  they  are  conclusive  proof 
of  the  universal  demand  for  this  form  of  family  pro¬ 
tection. 


INDUSTRIAL  INSURANCE  IN  FORCE  IN  THE 
WORLD  DECEMBER  31, 1909 


NO.  OF  AMT.  OF 

COUNTRIES  INDUSTRIAL  INDUSTRIAL  PER  CAPITA 

POLICIES  INSURANCE 


United  States . 

Canada . 

United  Kingdom . 

Germany . 

Scandinavia  (partly  est.) . 

Switzerland  (partly  est.) . 

Australia  and  New  Zealand. .  . 
Austria-Hungary  (partly  est.), 

South  Africa  (partly  est.) . 

Other  Countries  (est.) . 


21,192,322*  32,926,287,788*  332.00 
572,657**  67,932,466**  9.70 

29,149,924  1,424,382,285  32.63 

7,571,760  362,009,595  5.67 

500,000  59,000,000  5.74 

75,000  12,622,500  3.80 

450,000  48,190,000  9.64 

600,000  27,000,000  0.59 

50,000  2,000,000  4.00 

500,000  20,000,000 


Total .  60,656,663  34,949,424,634 

*  Exclusive  of  Canadian  business  of  Prudential  and  Metropolitan. 

**  Including  Canadian  business  of  Prudential  and  Metropolitan. 


RELATIVE  DEVELOPMENT  PER  CAPITA 

The  foregoing  table  exhibits  not  only  the  numbers  and 
amounts  of  Industrial  insurance  policies  in  force,  but 
also  the  per  capita  of  Industrial  insurance  in  the  more 
important  countries  of  the  world.  While  by  number  of 
policies  the  largest  progress  has  been  made  in  England, 
where  the  business  was  established  as  early  as  1854,  the 
largest  progress  in  amount  of  insurance  has  been  secured 

13 


Industrial  Insurance — Past  and  Present 

in  the  United  States,  with  a  correspondingly  high  per 
capita,  which,  however,  is  actually  much  greater  when 
allowance  is  made  for  the  large  proportion  of  agricul¬ 
tural  and  other  population  of  this  country,  which,  under 
present  conditions,  is  largely  outside  of  the  sphere  of 
Industrial  insurance. 

THE  BUSINESS  POLICY  OF  INDUSTRIAL  COMPANIES 

When  Industrial  insurance  was  first  established  the 
available  mortality  tables  were  of  somewhat  doubtful 
value  in  the  calculation  of  premium  rates,  but  the  pre¬ 
vailing  high  death  rates  of  the  period  suggested  extreme 
caution,  and  higher  charges  than  subsequent  experience 
proved  neccessary.  In  the  course  of  time  the  rates 
were  lowered — or,  more  accurately,  the  amounts  of 
insurance  were  increased  for  the  unit  premium,  and 
such  changes  were  made  retroactive,  so  that  the  old 
policyholders  enjoyed  equal  benefits  with  the  new. 
As  a  result  of  this  policy  of  liberality  and  sound  business, 
vast  sums  have  been  paid  to  Industrial  policyholders 
in  the  form  of  voluntary  financial  concessions,  which 
for  the  United  States  alone  probably  amount  to  not 
less  than  350,000,000  in  the  aggregate  to  date.  This 
policy  of  voluntary  concessions  has  become  an  integral 
factor  in  the  development  of  the  business  and  it  virtually 
appertains  to  the  liberalizing  of  every  policy  feature 
whether  involving  financial  considerations  or  not.  It 
must  be  obvious  that  it  is  largely  because  of  this  course 
of  fairness  and  liberality  that  the  Industrial  companies 
have  secured  to  themselves  the  universal  regard  and 
confidence  of  wage-earners,  who,  to  an  ever-increasing 
extent,  are  converting  the  system  of  Industrial  insur¬ 
ance  into  a  universal  provident  institution. 

SOCIAL  ASPECTS  OF  INDUSTRIAL  INSURANCE 

Where  so  much  has  been  accomplished,  it  is  safe  to 
assume  that  more  will  be  done  in  the  future  when  the 
business  shall  rest  upon  a  still  larger  basis  of  actual 
experience  and  when  the  insistent  efforts  of  active 

14 


Industrial  Insurance — Past  and  Present 

solicitors  will  no  longer  be  required  to  the  extent  and 
under  the  trying  conditions  common  to  the  earlier 
period  in  the  history  of  the  business.  As  will  be  shown, 
the  expense  rate  has  been  gradually  diminished  and 
there  has  been  a  corresponding  decrease  in  the  lapse 
rate,  and  a  marked  improvement  in  the  revival  rate, 
so  that  the  economics  of  efficient  management  are 
amply  established  by  actual  experience.  Every  im¬ 
provement  in  this  direction  widens  the  sphere  of  useful¬ 
ness,  and  while  the  chief  aim  in  a  business  of  this  kind 
should  be  to  reduce  the  cost  of  the  commodity  sold  to  the 
public,  it  will,  no  doubt,  be  possible,  in  course  of  time, 
to  add  other  features  more  or  less  germane  to  the  con¬ 
tract  of  Industrial  insurance.  How  far  such  improve¬ 
ments  are  possible,  or  advisable,  must,  for  the  present, 
remain  a  mere  matter  of  conjecture.  Considering 
the  vast  number  of  policyholders,  it  must  be  clear  that 
the  companies  cannot  undertake  doubtful  experimental 
work,  but  must  needs  proceed  only  along  lines  which 
warrant  at  the  outset  the  assumption  that  improvements, 
additions  or  alterations  in  the  plan  of  Industrial  insur¬ 
ance  are  not  likely  to  be  changed,  or  subsequently  to 
be  done  away  with.  In  other  words,  it  would  be  the 
height  of  folly  to  encourage  a  belief  on  the  part  of  the 
vast  multitude  of  policyholders  that  Industrial  insur¬ 
ance  can  do  much  more  than  what  the  contract  provides, 
since  it  is  exactly  in  the  unconditional  fulfillment  of  its 
contractual  obligations  that  the  companies  rest  their 
chief  claim  for  public  confidence,  and  public  faith  in 
the  security  of  an  Industrial  policy  as  being  equivalent 
in  intrinsic  value  to  a  government  bond.  At  the  same 
time,  the  spirit  of  the  age  is  decidedly  suggestive  of  a 
broadening  of  the  insurance  function,  and  throughout 
civilized  countries  the  theory  of  insurance  is  being 
applied  to  an  increasing  extent  to  the  successful  solution 
of  a  number  of  social  problems  affecting  the  welfare 
of  millions  of  mankind.  The  adoption  of  compulsory 
plans  of  insurance  by  European  continental  nations, 
and  the  proposed  national  insurance  plan  of  England, 

15 


Industrial  Insurance — Past  and  Present 

emphasize  the  importance  of  futher  progress  in  Indus¬ 
trial  Insurance,  so  that  a  system  well  adapted  to  the 
needs  of  the  public  when  it  was  first  established  may 
be  successfully  readapted  to  changing  ecomonic  and 
social  conditions,  most  of  all  in  a  country  like  the  United 
States,  where  the  possibility  of  social  reform  through 
legislation  is  perhaps  the  most  general  conviction  of  a 
people  accustomed  to  freedom  of  action  under  a  repre¬ 
sentative  form  of  government. 

REDUCTION  IN  THE  EXPENSE  RATE 

But  much  progress  has  been  made  in  recent  years,  and 
in  no  direction  has  this  been  more  marked  than  in  the 
gradual  reduction  of  the  expense  rate ,  with  the  practical 
certainty  of  a  still  further  reduction  in  the  future.  Of 
course,  a  limit  must  be  reached  beyond  which  a  curtail¬ 
ment  of  expenses  would  mean  perhaps  a  serious  re¬ 
striction  in  the  further  development  of  the  business, 
with  resulting  loss  to  the  companies  in  the  long  run. 
Combining  the  largest  two  Industrial  companies,  the 
ratio  of  expenses  to  total  income  has  been  reduced  from 
47.1%  in  1900  to  43.2%  in  1905  and  38.8%  in  1910. 
Even  a  very  slight  reduction  in  the  expense  rate  is 
equivalent  to  the  saving  of  relatively  large  sums  of 
money,  which  of  course,  revert  to  the  benefit  of  the 
policyholders  and  largely  in  the  form  of  voluntary 
financial  concessions.  If,  for  illustration,  the  expense 
rate  in  1910  had  been  the  same  as  ten  years  before  for 
the  largest  two  Industrial  companies,  the  actual  amount 
paid  on  this  account  would  have  been  37,430,767  greater 
than  was  really  the  case.  Realizing  the  great  practical 
importance  of  reducing  the  cost  of  transacting  the  busi¬ 
ness,  it  may  safely  be  asserted  that  nothing  is  left  un¬ 
done  on  the  part  of  the  companies  to  make  the  conduct 
of  the  business  as  economical  as  possible,  and  their 
financial  history  of  the  last  ten  years  abundantly  proves 
that  this  viewpoint  prevails  in  the  administration  of  at 
least  the  principal  companies  which  transact  this  form 
of  insurance. 


16 


Industrial  Insurance — Past  and  Present 


REDUCTION  IN  THE  LAPSE  RATE 

Of  almost  equal  importance  to  a  reduction  in  the  ex¬ 
pense  rate  is  the  greatest  possible  reduction  in  the  lapse 
rate.  Here  also  a  point  may  be  reached  where  the  prog¬ 
ress  of  the  business  would  be  seriously  imperiled  by 
needless  restrictions,  since  a  considerable  number  and 
proportion  of  Industrial  lapses  do  not  represent  a 
material  financial  loss  to  the  insured.  While  in  Ordi¬ 
nary  insurance  only  the  paid-for  business  is  reported 
to  most  of  the  Insurance  Departments,  in  Industrial 
insurance  all  policies  issued  are  reported,  and  considering 
the  magnitude  of  the  business  the  resulting  data  are 
often  decidedly  misleading — that  is  to  say,  in  the  nature 
of  the  business  a  considerable  amount  of  new  Industrial 
insurance  is  written  but  not  actually  paid  for,  except, 
perhaps,  to  the  extent  of  a  single  weekly  premium, 
which  may  be  as  low  as  three  cents  and  which  will 
average  about  ten  cents.  The  companies  allow  four 
weeks’  grace,  so  that  the  insured  has  had  a  reasonable 
amount  of  insurance  protection  in  return  for  his  pay¬ 
ment,  and  in  actual  practice  on  account  of  necessary 
office  methods  the  lapsed  policy  will  rarely  be  in  force 
on  the  books  of  the  company  for  less  than  six  weeks. 

THE  LAPSE  QUESTION 

Most  of  the  lapses  do  not  represent  a  material  financial 
loss  to  the  insured,  but,  on  the  contrary,  constitute 
a  serious  question  to  the  Industrial  companies,  which 
have  left  nothing  undone  that  ingenuity  could  suggest 
or  that  stringent  rules  and  regulations  could  control, 
to  diminish  the  issue  of  business  likely  to  lapse  to  the 
lowest  possible  minimum.  Aside  from  this  class  of 
policies  of  short  duration  there  is,  of  course,  a  fair 
amount  of  business  which  lapses  after  a  variable  dur¬ 
ation  of  from  six  weeks  to  three  years,  subsequent  to 
which  the  policies  have  a  paid-up  value,  which  returns 
to  the  policyholders  the  equivalent  of  the  reserve 
accumulations.  When  the  lapses  are  calculated  upon 

17 


Industrial  Insurance — Past  and  Present 

the  total  in  force,  it  appears  that  while  in  1900  the 
percentage  of  the  total  Industrial  policies  in  force 
terminated  by  lapse  was  21.4,  the  corresponding  per¬ 
centage  for  1905  was  17.2,  and  for  1910,  13.5.  It, 
therefore,  requires  no  further  argument  to  sustain  the 
conclusion  that  in  this  direction  also  the  American 
Industrial  companies  have  made  substantial  progress 
during  the  last  decade. 

The  Industrial  agent  is  usually  paid  a  commission 
of  fifteen  times,  or  more,  of  the  new  premiums  secured. 
That  is,  for  every  10  cents  premium,  for  illustration, 
the  agent  is  paid  at  least  $1.50  in  cash,  generally 
termed  “Special  Salary.”  If  policies  lapse  while  the 
agent  remains  in  the  service,  he  has  to  replace  the  net 
decrease  in  weekly  premiums  by  an  equivalent  amount 
of  weekly  premiums.  This,  of  course,  is  neces¬ 
sary  to  protect  the  companies  and  their  policyholders 
against  wrongful  practices.  If  however,  lapses  occur 
on  the  debits  of  agents  who  have  left  the  service,  there 
is  a  net  loss,  not  only  in  the  amount  of  special  salary 
paid,  but  the  expenses  of  medical  examination,  Home 
Office  accounting,  and  other  clerical  charges.  The 
insured  has  had  the  benefit  of  insurance  protection  for 
the  time  the  policy  was  in  force,  and  it  is  not  at  all 
unusual  for  claims  to  occur  under  policies  of  even  very 
short  duration.  The  companies  grant  four  weeks’  grace 
in  the  payment  of  premiums,  during  which  the  policy 
continues  in  force.  For  these  and  many  other  reasons, 
lapses  during  the  early  years  of  policy  duration  are  a 
considerable  financial  loss  to  Industrial  companies,  and 
everything  possible  is  done  to  prevent  them. 

IMPROVEMENT  IN  THE  REVIVAL  RATE 

In  marked  contrast  to  a  diminished  lapse  rate,  there 
has  been  a  gradual  increase  in  the  revival  rate — that  is 
to  say,  not  only  has  there  been  a  lesser  amount  of 
unstable  business  issued,  but  there  has  been  a  corre¬ 
sponding  saving  in  business  lapsed  but  reinstated, 

18 


Industrial  Insurance — Past  and  Present 


practically  without  expense  to  the  insured.  Even  in 
cases  where  a  medical  examination  is  required,  the 
expense  of  the  same  is  paid  for  by  the  company.  The 
data  are  not  available  for  the  principal  Industrial  com¬ 
panies  as  to  revivals  during  1910,  but  in  the  case  of 
the  Prudential,  288,614  Industrial  policies  were  revived 
during  that  year,  or  20.9%  of  the  total  number  lapsed, 
excluding  deaths  and  matured  endowments.  Revivals, 
of  course,  are  chiefly  of  value  in  the  case  of  policies 
which  have  been  in  force  for  a  number  of  years  and 
which  have  accumulated  paid-up  or  surrender  values. 
Here  also  everything  possible  is  done  on  the  part  of  the 
companies  to  encourage  the  agents  to  revive  lapsed 
policies,  and  the  assistant  superintendents  are  specifi¬ 
cally  instructed  to  urge  upon  lapsed  policyholders  the 
advisability  of  reviving  their  contracts  in  view  of  the 
fact  that  on  account  of  increasing  age  there  is  an  in¬ 
creasing  cost  of  insurance,  which  makes  it  particularly 
desirable  to  reinstate  contracts  in  force  for  a  number 
of  years  and  lapsed  through  inadvertence  or  because 
of  temporary  inability  to  pay.  The  companies  go 
still  further  than  this  and  permit  the  insured,  under 
certain  conditions,  to  revive  policies  by  means  of  a  lien 
which  makes  it  unnecessary  to  pay  the  premium  in 
arrears  in  cash.  Neither  in  Ordinary  insurance,  nor 
in  the  case  of  fraternal  societies,  are  the  conditions  of 
reinstatement  as  liberal  as  in  Industrial  insurance,  and 
it  is  probably  safe  to  say  that  the  proportion  of  re¬ 
instatements  is  much  larger  in  the  latter  than  in  the 
former,  although  exact  data  are  not  available  to  sub¬ 
stantiate  this  conclusion. 


THE  INSURANCE  OF  CHILDREN 

It  seems  hardly  necessary  to  even  refer  to  the  formerly 
much-debated  question  as  to  the  possibilities  of  abuse 
in  connection  with  the  insurance  of  children.  During 
the  nearly  forty  years  of  continuous  experience  not  a 
single  case  of  serious  abuse  has  been  established  by  a 

19 


Industrial  Insurance — Past  and  Present 

jury  verdict,  and  the  occasional  allegations  of  child 
murder  or  child  neglect  have,  upon  careful  inquiry, 
been  found  to  be  without  substantial  support.  In  the 
actual  experience  of  the  large  Industrial  companies  the 
mortality  of  insured  children  has  been  invariably  below 
the  mortality  of  the  general  population  of  corresponding 
ages,  and  the  limitation  of  amounts  as  governed  by  the 
companies’  practice  and  statutory  requirements  abso¬ 
lutely  precludes  speculation  for  gain.  The  earlier 
opposition  to  the  insurance  of  children  may,  therefore, 
be  said  to  have  practically  passed  away,  and  within 
recent  years  there  have  been  only  a  few  sporadic  at¬ 
tempts  at  adverse  legislation,  with  a  very  remote  possi¬ 
bility  of  the  enactment  of  drastic  laws.  While  a  law 
prohibiting  the  insurance  of  children  was  enacted  in 
Colorado  in  1893,  no  other  state  has  followed  this  ex¬ 
ample,  and  it  is  sincerely  to  be  hoped  that  in  course 
of  time  the  Colorado  law  will  be  repealed,  as  an  unjust 
reflection  upon  the  people  of  that  state,  who  are  need¬ 
lessly  curtailed  in  their  freedom  of  contract  in  this 
matter,  in  marked  contrast  to  the  freedom  of  action 
permitted,  not  only  in  all  of  the  other  American  states, 
but  practically  throughout  the  entire  civilized  world, 
wherever  Industrial  Insurance  is  carried  on  to  a  con¬ 
siderable  extent. 

Within  recent  years  special  efforts  have  been  made 
to  popularize  endowment  insurance  on  the  lives  of 
children,  and  increasing  amounts  of  such  insurance  are 
being  written  by  all  the  large  Industrial  companies 
throughout  the  world.  The  tendency  in  this  direction 
is  conclusive  evidence  of  increasing  parental  foresight 
and  prudence  in  matters  of  insurance  and  proves  that 
the  underlying  motives  in  the  insurance  of  children  are 
not  those  of  sordid  selfishness. 

THE  SOCIAL  VALUE  OF  INDUSTRIAL  INSURANCE. 

It  is  rather  difficult  to  establish,  by  means  of  statistics, 
the  direct  relation  of  Industrial  insurance  to  public 


20 


Industrial  Insurance — Past  and  Present 

welfare,  particularly  in  the  direction  of  diminishing 
public  dependence  in  the  event  of  death.  Even  the 
returns  of  pauper  burials  throughout  the  United  States 
do  not  furnish  a  conclusive  answer  to  the  question, 
since  pauper  interments  include  a  considerable  propor¬ 
tion  of  children  under  the  age  of  one,  of  persons  found 
dead  and  not  identified,  of  strangers  dying  in  city  hos¬ 
pitals,  with  no  opportunities  for  the  claiming  of  the 
bodies  by  relatives,  etc.  Anyone,  however,  familiar 
with  actual  conditions  during  the  seventies  and  the 
interval  of  years  to  the  present  day,  will  confirm  the 
statement  that  the  public  demand  for  pauper  burials  is 
decidedly  less  to-day  than  in  the  past,  and  to  a  certain 
extent  this  claim  can  be  established  by  trustworthy 
data.  While  forty  years  ago  the  pauper  burial  rate  in 
American  cities  for  which  the  information  is  available 
was  23.7  per  10,000  of  population,  the  rate  had  fallen 
to  15.5  by  1891-1895  and  finally  to  10.4  during  the  five 
years  ending  with  1910.  If  the  pauper  burial  rate  of 
the  five  years  preceding  the  introduction  of  Industrial 
insurance  prevailed  at  the  present  time,  it  is  estimated 
that  there  would  have  been,  in  cities  of  25,000  or  more 
population,  37,915  more  persons  buried  at  public  ex¬ 
pense  during  1910  than  was  actually  the  case.  It  is 
quite  probable  that  the  pauper  burial  rate  has  been 
increased  within  recent  years  by  the  large  foreign  immi¬ 
gration,  but  this  fact  aside,  there  has  been  an  actual 
and  fairly  persistent  decline  in  the  pauper  burial  rate 
since  Industrial  insurance  was  established  in  the  United 
States  in  1875.  From  every  point  of  view,  this 
result  must  be  considered  a  most  desirable  improve¬ 
ment  in  the  social  and  economic  condition  of  the 
American  people,  and  it  is  safe  to  say  that  the  achieve¬ 
ment  would  have  been  impossible  without  Industrial 
insurance,  which  primarily  aims  at  the  making  of  a 
provision  for  the  payment  of  a  sum  sufficient  for 
burial  expenses  and  the  last  medical  attendance  in  the 
event  of  death. 


21 


Industrial  Insurance — Past  and  Present 


PAYMENTS  TO  POLICYHOLDERS. 

The  social  and  economic  value  of  Industrial  insurance 
is  only  in  part  measured  by  the  financial  returns  to 
policyholders,  which,  during  1910,  reached  $45,000,000. 
As  yet  the  business  is  largely  in  its  beginnings,  but 
slowly  the  average  duration  of  insurance  is  increasing, 
followed  by  a  corresponding  rise  in  the  proportion  of 
returns  to  policyholders  of  premium  or  total  income. 
Aside  from  the  direct  benefits  of  Industrial  insurance, 
however,  there  are  indirect  results — social,  moral  and 
financial — which  are  well  deserving  of  the  careful  con¬ 
sideration  of  the  earnest  student  of  modern  thrift 
institutions.  There  can  be  no  question  of  doubt  but 
that  through  this  form  of  insurance  savings  habits  have 
been  widely  fostered  among  a  class  of  people  not  reached 
as  effectively  by  any  other  thrift-teaching  agency,  and 
that  every  form  of  savings  has  been  aided  by  the  devel¬ 
opment  of  systematic  habits  of  saving  through  Indus¬ 
trial  insurance.  The  accumulated  reserves  of  the 
Industrial  companies  constitute  a  vast  fund  of  securities 
of  the  highest  character,  and  through  this  fund  millions 
of  citizens  are  directly  interested  in  the  conservation  of 
property  and  the  maintenance  of  public  order,  while 
through  their  tax  payments  the  companies,  on  behalf 
of  their  policyholders,  contribute  directly  and  to  a  not 
inconsiderable  extent  to  the  revenues  of  the  States  and 
the  Federal  Government. 


SOCIAL  ASPECTS  OF  INSURANCE 

“Insurance,”  it  has  been  well  said  by  Mr.  Thomas 
Mackay,  the  distinguished  author  of  a  treatise  on 
“The  English  Poor,”  “is,  for  many  reasons,  more  im¬ 
portant  to  the  working  class  than  any  other  form  of 
savings.  Insurance  enables  the  claims  of  the  future  to 
become  definite  and  to  rank  among  the  claims  of  the 
present,  and  to  the  poor  man  this  is  an  enormous  ad¬ 
vantage.”  What  is  true  of  all  insurance  is  particularly 

22 


Industrial  Insurance — Past  and  Present 


true  of  Industrial  insurance,  and  it  is  not  a  matter  to  be 
lightly  considered  that  some  18,000,000  wage-earners 
and  their  dependents,  of  the  American  nation  should, 
within  a  single  generation,  have  attained  to  so  enviable 
a  position  of  economic  independence  with  regard  to  one 
of  the  fundamental  social  needs  of  modern  life — that  is, 
an  adequate  and  certain  provision  of  a  sum  sufficient  to 
meet  the  expenses  of  burial  and  last  illness.  Social 
reformers  are  often  impatient  of  results,  but  in  the  case 
of  Industrial  insurance  the  achievements  referred  to 
conclusively  prove  that,  if  given  the  opportunity,  the 
mass  of  the  people  will  solve  their  own  economic  prob¬ 
lems  in  their  own  way,  at  their  own  cost,  and  in  their 
own  time.  In  an  age  in  which  it  is  often  erroneously 
assumed  that  legislation  alone  offers  the  solution  of  the 
existing  problems  of  poverty  and  discontent,  it  is,  to  say 
the  least,  profoundly  suggestive  of  the  unrealized  possi¬ 
bilities  of  the  doctrine  of  self-help  to  find  that,  in  re¬ 
sponse  to  the  active  and  intelligent  solicitation  of  the 
Industrial  agency  force,  wage-earners  in  the  United 
States  have  already  provided  to  the  extent  of 
32,926,288,000  of  Industrial  insurance,  the  required 
amount  of  family  protection,  on  the  only  plan  which  has 
thus  far  been  found  practicable  and  generally  successful. 
It  may,  therefore,  safely  be  predicted  that  a  still  more 
marvelous  development  and  still  greater  achievements 
will  be  realized  in  the  future,  upon  the  basis  of  a  founda¬ 
tion  resting  in  the  confidence  of  the  people  and  sus¬ 
tained  by  an  entire  generation  of  actual  experience, 
which  ever  has  been  and  ever  will  be  the  best  guide  in 
the  affairs  of  men. 


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